Govt fails to remit civil servants’ contributions

THE cash-strapped Zimbabwe government has not remitted the money deducted in February and this month from civil servants’ salaries to banks owed by government workers through loans extended to them despite making the deductions.

Hazel Ndebele

According to senior banking executives, the Salary Service Bureau (SSB) owes its bank over US$3 million in deductions made in February. The figure could be higher when other banks are considered.

Banks say government, increasingly struggling to meet its civil service salary obligations as the economic crisis bites deeper, had in the past been transferring the money to banks without delay but now it is no longer remitting.

“Of late government has been delaying in remitting deductions from civil servants’ salaries and has not transferred the money (for bank loans) it deducted from their salaries in February and March. This has been the longest period of delay so far,” said a senior banking executive. “Banks are losing out because they make money from revolving bank loan funds which government is currently withholding. It is not the bank account holder’s fault that his or her installment to service the bank loan has not yet reached the bank when it has been deducted by the SSB. So as a bank we cannot charge late payment interest on these accounts as is standard practice.”

Bank officials said it was critical for government to remit deductions in order for financial institutions to function well and serve their clients. Banks are worried about the issue with several of them holding meetings last week to discuss the way forward.

“Banks have been holding meetings to strategise and map the way forward regarding this issue. Civil servants received their March salaries this week and this effectively means government is now in two months’ arrears,” said a bank official.

Finance minister Patrick Chinamasa (pictured) could not be reached for comment as his mobile phone went unanswered.

Sources, however, said government had not remitted money to different banks due to the fact that it has no cash to pay out as the deductions were only effected on paper.

Government has since tasked the Ministry of Finance to co-ordinate efforts to reduce the wage bill which chews over 80% of its revenues. It has initiated a head count of personnel and their duties as part of efforts to trim the civil service.

Chinamasa last year said during his 2015 national budget presentation government would spend 92% of revenues on recurrent expenditure, leaving a negligible 8% for capital projects and service delivery.